Fintech is short for financial technology. At its most basic level, fintech encompasses any technology that provides financial services. Some people even argue that the credit card is a form of fintech.
Today, however, when most people use the term, they’re referring to digital services that make managing money, banking and financial transactions easier. This includes everything from cryptocurrencies to online lending. If you’ve ever sent money to a friend through a wallet app, like Venmo, or checked your account balance with your bank’s mobile app, you’ve been using fintech.
Fintech is quickly becoming a part of our everyday lives, making it a burgeoning field. By the end of 2022, the global fintech market was estimated at about $397 billion, according to the Fintech Index, and growing at about 24% at the time of this article.
If you’re interested in fintech, this article will explain the common forms of fintech, potential industry jobs and salaries and how to enter the field.
What does fintech mean?
Fintech encompasses a wide range of technological solutions that improve traditional financial services. The most common services include:
● Digital payments – These types of payments are made from one account to another using a digital service. Paypal is a well-known example.
● Online lending – This service allows customers to complete the entire borrowing process online.
● Robo-advisors – A type of digital investment management, a robo-adviser is a platform that provides automated financial planning and investment services.
● Blockchain technology – This tech enhances security and streamlines data verification, which is integral for processing online transactions.
● Peer-to-peer lending – Whereas online lending is for personal use, peer-to-peer lending digitally connects businesses to lenders.
● Crowdfunding platforms – These websites and apps enable fundraisers to connect with the public to elicit financial pledges.
The primary goal of fintech is to streamline and enhance financial processes, making them more accessible, affordable and convenient for both consumers and businesses.
How does fintech work?
Fintech operates on a foundation of cutting-edge technologies such as artificial intelligence, data analytics, machine learning, blockchain and cloud computing. These technologies enable the creation of digital platforms and applications that facilitate financial transactions and decision-making.
For instance, digital payment platforms like PayPal and Square offer seamless online transactions, reducing the need for physical cash. Robo-advisors utilize algorithms to provide automated investment advice, making financial planning more accessible to a broader audience. Blockchain technology ensures secure and transparent transactions, potentially transforming the way assets are exchanged and recorded.
Fintech and the future of finance
The future of fintech holds immense potential as it continues to revolutionize the financial landscape. Here are some key trends to watch:
- Open Banking: Open banking initiatives are gaining momentum, allowing third-party developers to build applications and services on top of existing financial institutions’ data. This encourages innovation and provides customers with more personalized financial solutions.
- Digital Currencies: Cryptocurrencies like Bitcoin have paved the way for digital currencies. Central banks are exploring the possibility of issuing their own digital currencies, which could reshape the global financial system.
- AI and Automation: Artificial intelligence will play a vital role in enhancing customer experiences through personalized financial recommendations, fraud detection and customer support automation.
- RegTech: Regulatory Technology, or RegTech, employs technology to help financial institutions comply with regulations more efficiently. This is particularly crucial in an environment of ever-evolving regulatory requirements.
The rapid growth of fintech has opened up a wide array of job opportunities for individuals with diverse skill sets. Some key fintech roles include:
- Product Manager: Fintech is always changing, and product managers lead the development of cutting-edge products from idea to launch.
- Sales Representative: Once products are on the market, sales reps are responsible for connecting clients with the new technology.
- Software Developers: Fintech companies require skilled developers to create and maintain digital platforms and applications.
- Data Analysts: Data analysts play a pivotal role in extracting insights from vast amounts of financial data to inform decision-making and improve customer experiences.
- Cybersecurity Specialists: With the increasing reliance on technology, the need for cybersecurity experts to safeguard sensitive financial information is paramount.
- UX/UI Designers: User experience and user interface designers ensure that fintech applications are intuitive, user-friendly and visually appealing.
Salaries in the fintech industry vary widely depending on factors such as job role, experience, location and the specific company. The specialized nature of the industry does mean that, on average, fintech professionals tend to earn higher salaries than their equivalents in more traditional companies.
For example, software developers can earn almost 30% more working for a fintech company than for a traditional financial institution, according to levels.fyi.
Learning fintech – boot camps and degrees
Breaking into the fintech industry isn’t simple. Increased compensation stems from the need for specialized skills and knowledge. Those seeking jobs in fintech must be versed in both finance and technology.
For people currently in finance, there are hundreds of “boot camps” claiming to teach fintech coding in a few weeks. Unlike degrees, boot camps aren’t held to any academic standards. Some boot camps are two-year programs offered by respectable institutions of higher learning, others are a series of videos compiled by independent businesses.
People willing to commit to a two-year boot camp might be best served by joining a master’s program. An M.S. in finance is generally more respected and allows students to dive into the material. More importantly, some degree programs allow international students to apply for an Optional Practical Training (OPT) extension.
People with technical skills looking to move into fintech are unlikely to find any accelerated finance boot camp. Finance is a complicated field spanning banking, trade and housing markets, just to name a few aspects. A forward-thinking master’s in finance, like the Lerner College’s M.S. in finance at the University of Delaware, provides a solid foundation for people looking to enter the job market.
Innovators looking to lead the future of fintech should consider a dynamic doctoral program, like the Lerner College’s Ph.D. in financial services analytics (FSAN). Fintech is changing the world, and leaders in the field will need an in-depth understanding of the data-science theories and innovative and efficient models underpinning different financial services.
Is fintech a STEM degree?
International Students enrolled in programs designated as STEM by the U.S. Department of Homeland Security can apply for an Optional Practical Training (OPT) extension to remain in the U.S. for up to an additional 24 months. OPT only applies to full degree programs, and therefore students with certificates from boot camps cannot apply.
If a finance program adheres to a high level of technical rigor, it is eligible for STEM designation. Certification varies by institution and degree. Some colleges, like the Lerner College’s M.S. in finance, advertise their STEM status on their finance degree webpage. If a program does not specifically state that it is STEM-designated, prospective students should contact the program directly.